Hanover approves merger with Chelsey Direct

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Hanover Direct Inc.'s board has unanimously approved a cash merger agreement with Chelsey Direct LLC, the company's largest shareholder.

The merger agreement provides for the acquisition of the shares of Hanover's common stock that Chelsey does not already own at $0.25 per share.

In May, Chelsey withdrew an offer to take Weehawken, NJ-based Hanover private at $1.25 per share due to Hanover's worsening operations.

The multichannel marketer sells home, apparel and gift items under brand names such as Domestications, The Company Store, Company Kids, Silhouettes, International Male and Scandia Down.

Chelsey and its affiliates already own 77 percent of Hanover's common stock and all of the Series C Preferred Stock. As a result, Chelsey maintains approximately 92 percent of the voting rights of the company and has sufficient voting power to approve the merger without the vote of any other shareholder.

Hanover's board had previously engaged investment bank Goldsmith, Agio, Helms & Lynner to conduct an independent valuation of the company. The bank informed Hanover on Nov. 17 that the company's common stock has no value since the enterprise value of the company was less than the combined value of the secured debt and the outstanding preferred stock of the company.

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